Guest Post: The ‘No Exit’ Meme Goes Mainstream

A Change in Tune

It is interesting to watch how mainstream reporting on certain major topics at times undergoes chameleon-like changes with the meme originally presented suddenly turning into the exact opposite. Not too long ago conviction was extremely high that the Fed would slow down its 'QE' operations and that the economy's weak recovery was going to morph into something one might call 'business as usual'. That notion has never struck us as credible.

Readers who follow Zerohedge may have noticed two recent articles discussing the change in mainstream bank analyst views on the dreaded 'QE taper'. It is instructive to review them: Deutsche Bank now argues that there 'won't be any tapering at all', while SocGen as gone a step further and is now saying 'QE may be increased'.

In other words, mainstream analysts have finally realized that the insane are running the asylum. Regarding the changing tune in the popular mainstream press, we have come across this recent article at Bloomberg, entitled “Central Banks Drop Tightening Talk as Easy Money Goes On”.

“The era of easy money is shaping up to keep going into 2014. The Bank of Canada’s dropping of language about the need for future interest-rate increases and today’s decisions by central banks in Norway and Sweden to leave their rates on hold unite them with counterparts in reinforcing rather than retracting loose monetary policy. The Federal Reserve delayed a pullback in asset purchases, while emerging markets from Hungary to Chile cut borrowing costs in the past two months.

“We are at the cusp of another round of global monetary easing,” said Joachim Fels, co-chief global economist at Morgan Stanley in London.

Policy makers are reacting to another cooling of global growth, led this time by weakening in developing nations while inflation and job growth remain stagnant in much of the industrial world. The risk is that continued stimulus will inflate asset bubbles central bankers will have to deal with later. Already, talk of unsustainable home-price increases is spreading from Germany to New Zealand, while the MSCI World Index of developed-world stock markets is near its highest level since 2007.

“We are undoubtedly seeing these central bankers go wild,” said Richard Gilhooly, an interest-rate strategist at TD Securities Inc. in New York. They “are just pumping liquidity hand over fist and promising to keep rates down. It’s not normal.”

(emphasis added)

So, have central bankers drunk the Kool-Aid with the acid in it? What we see here is global acceptance of the Bernankean theory – largely derived from Milton Friedman's analysis of the depression era and Bernanke's own analysis of Japan's post bubble era – that even though new bubbles may be staring everyone into the face, central banks must 'not make the mistake to stop easing too early'. It is held that that would 'endanger the recovery', similar to what happened in the US in 1937 and Japan in 1996.

We have previously discussed that the 'Ghost of 1937' is hanging over the proceedings and tried to explain why this reasoning is absurd. While it is true that the liquidation of malinvested capital would resume if the monetary heroin doses were to be reduced, the only alternative is to try to engender an 'eternal boom' by printing ever more money. This can only lead to an even worse ultimate outcome, in the very worst case a crack-up boom that destroys the entire monetary system.

Why It Is Not 'Business as Usual'

One of the reasons why we remain convinced that the widely hoped for return to a 'normal expansion' isn't likely to occur is that we have some evidence – tentative though it may be – that the economy's production structure has been severely distorted again by the Fed's interest rate manipulations and the huge growth in the money supply it had to engender in order to keep interest rates below the natural level dictated by time preferences.

As one of our readers frequently points out in the comments section, the policy is mainly a stealth bank bailout, as money is transferred from savers to banks in order to avert the liquidation of unsound credit. How much unsound credit is still clogging up the system after the 2008 crisis? We unfortunately don't know, as bank balance sheets have become even darker black boxes than they already were after 'mark to market' accounting was suspended in April of 2009 (no doubt people who have the time to study the hundreds of pages of bank earnings reports with their endless footnotes in detail could come up with estimates, but apparently no-one really takes the time to do that).

Below is a chart that we use to gauge how factors of production are distributed in the economy. Note that this cannot be more than a rough guide, but it is a guide that has served us well in identifying unsustainable credit-induced bubbles in the past.

What the chart shows is the ratio of capital goods (business equipment) to consumer goods production. When the ratio rises, it means that factors of production are increasingly moving from lower order stages of the capital structure to higher order ones – which is a phenomenon typically associated with credit-induced booms.

Of course this chart cannot tell us how much of the capital drawn toward higher order stages will turn out to be malinvested. However, what it does tell us is that the economy's production structure is in danger of tying up more consumer goods than it produces. In other words, it is an economy that may temporarily already be operating outside of what Roger Garrison calls the 'production possibilities frontier'.

By definition, this state of affairs is unsustainable. Eventually the process will reverse, namely once market interest rates stop 'obeying' the central bank's diktat and relative prices in the economy begin to revert to something a bit closer to their previous configuration. The revolutionized price structure can of course never return precisely to its initial, pre-boom state. However, if market interest rates were to start increasing, the prices of capital goods would certainly begin to decline relative to the prices of consumer goods. The prices of titles to capital, i.e. stocks, would then begin to fall as well, as would the ratio shown below.

The production of capital versus consumer goods in the US economy – once again reflecting credit bubble distortions – click to enlarge.

For readers not familiar with the long term chart, we show it below. What is interesting about this chart is that prior to the Nixon gold default and the adoption of a pure fiat money, the ratio traveled in a fairly narrow sideways channel. It only began to embark on a strong secular rise once the greatest credit bubble in history took off:

The production of capital versus consumer goods, long term. Prior to the massive credit bubble that started after the last tie of the dollar to gold was abandoned, the ratio traveled in a tight sideways channel between 0.3 and 0.4 – click to enlarge.

To be sure, not all of this structural change in the economy's capital structure can be blamed on the credit bubble. Partly it is probably also a result of the vast increase in global trade, which enabled a different and more efficient distribution of production to be put into place (labor-intensive consumer goods such as apparel are for instance nowadays mainly produced in China and other Asian nations). To the extent that the shift is due to the law of association it is beneficial and nothing to worry about.

Nevertheless, it can be clearly seen on the chart that even if we allow for a structural shift that is to some degree the result of benign developments, periods in which the credit bubble expands more strongly are accompanied by strong increases in the ratio, while busts result in 'mean reversion' moves.

The reason why these mean reversion moves don't play out more forcefully is that the central bank always does its utmost to arrest and reverse the liquidation of malinvested capital and unsound credit.

Conclusion:

Once the economy's capital structure is distorted beyond a certain threshold, it won't matter anymore how much more monetary pumping the central bank engages in – instead of creating a temporary illusion of prosperity, the negative effects of the policy will begin to predominate almost immediately.

Given that we have evidence that the distortion is already at quite a 'ripe' stage, it should be expected that the economy will perform far worse in the near to medium term than was hitherto widely believed. This also means that monetary pumping will likely continue at full blast, as central bankers continue to erroneously assume that the policy is 'helping' the economy to recover.

Yeah, right... the FACT that our paradigm has been based on the improbable notion of perpetual growth on a finite planet has nothing to do with this "downfall?," no siree, it's all been about the "Communist Plot."

I'd fucking hoped that when the USSR went down that we'd finally gotten rid of that "Commies are coming" monkey from our lexicon. Apparently not... (still sells to the peanut gallery)

ponzi has no ceiling, only a basement.
a basement with bars and guards and shit
when the open air thing fails.
.
Dave Edmunds - You'll Never Get Me Up (In One Of Those)http://www.youtube.com/watch?v=sA-7cFeFPJ4

It is not MAINLY a stealth bank bail out. It is ENTIRELY a stealth bank bail out.

As to how it ends, long rates will not spontaneously rise in response to some magical recognition of Ben's high treason. Pension money and institutional money continues to flow into stocks, because it has no other place to go. It really is that simple.

This ends when something big collapses, something the Fed can't paper over. There are many candidates, so it is quite impossible to predict. Hedge accordingly.

And, it's not really stealth at all... (I think that most people get it that the bankers' are being stuffed)

It's the System that's collapsing. They're trying to sell harder (by way of stuffing the banks). People ain't buying because they're broke- the rate of growth of the past several decades has borrowed too heavily from the future and the future just doesn't have the growth to keep up the pace.

"This ends when something big collapses," Or, when something big gets consolidated with something else big(ger), which pretty much signals that competition is over (and we're full-on in maintenance mode trying to just keep the shit running). Margin compression from economies of scale in reverse... But yeah, there's gonna be a large popping sound eventually...

the greenback being the world reserve currency not only puts it at a distinct advantage in the world, but that also makes the potential downside that much greater. Since the "value" of the currency is purely faith based, if that faith were to be shaken on a large scale, it would be disasterous. two thirds of the US dollars in existence reside outside our borders. We are currently able to print and print and export the inflation that might otherwise afflict us, but what if major creditor nations decided they no longer trusted the US dollar? The dollar bill is our number one export ... what if other countries no longer trusted it and didn't want it? what if our money supply tripled in this country over the course of a month?

Forgive my naivety, but hasn't Japan been creating funny money for many moons, so why the angst with USSA doing the same? Is it to google-bomb the doom 'n gloom meme for ad revenue?

I think what is missed in statements like this is Japan was a major exporter during many of it's "bad" years. It's bad years saw massive savings by its people, unfortunately in JGBs. The U.S. is a major importer of goods and its citizens have little or no savings and massive debt. Most of Japan's debt is held internally while half of the U.S. debt is external.

Thanks for the explanation, that helps a lot to understand these dastarly market machinations.

Perhaps USSA needs to churn out more Hollywood trash to help with exports as the trite spouted about "U.S. Might Have More Oil Resources Than Saudi Arabia" sound like utter bullshit; perhaps a meme by a hedge-fund to pump up specualtive stocks.

Can history repeat itself where the Belgium's occupied the Wiemer Replublic for reparations, is it conveiable to believe that the Chinese could march on american land to demand what's theirs?

That was a good question. And you got 2 good answers from 2bit and cashonly. Add them together and you have the core of how the world (currently) operates.

Japan works because they were major exporters for decades (not recently, though).

The US works because it has the world's reserve currency (the so-called petro-dollar, which we may lose as our influence wanes on the world stage).

If you think about it, other nations MUST be exporters to the nation with the world's reserve currency. How else would that currency be held so widely by other nations except by exporting their goods to us and getting our currency in return?

Once you have that, you only need to add military supremacy to the mix.

After winning WWII, the US briefly exported like crazy to the rest of the world (rebuild), and the new regime had begun. Nnobody dared challenge the US military other than the USSR, which eventually lost to us by economics, not by military might. Which brings you up to where the current global regime was firmy established roughly 20 years ago after the fall of the Soviet Union.

Now that regime is under severe strain. Where it goes from here nobody (who is honest) knows in detail, but it's not looking good for the US. Japan isn't an export nation any more and their debt is silly-stupid. The Greenback's status as a reserve currency is challenged on all fronts, including, notbably, China- none big enough to do it alone, but perhaps in aggregate, aided by our own spiral into debt hell.

The U.S. has tons of untapped oil. The problem is that it costs way more to pull it out than the average consumer can afford to pay at the pump. If we found that the moon was completely hollow and filled with oil it wouldn't make a damn bit of difference.

Japan's game is internal. Just watch as their pensions collapse. The US, however, has shifted in this direction by having the Fed be the primary purchaser of US debt: I agree that this is a good strategy for trying to hold on to some sense of control (vs. having outside entities calling it all in). Remember: if you owe your banker $1,000 it is YOU that is in trouble; if you owe your banker $1,000,000 it is the BANKER that is in trouble (UST holders will eventually get burned, which is why I've said [for a good two years now] that the Fed will be the black hole that swallows up all the debt and then implodes).

The exponential function necessitates that it all stop. It's an immutable fact that the game ends. And, as they say, it happens slowly, then all of a sudden...

There is ZERO chance that the perpetual growth paradigm could go on forever.

The flight path was always one ending in a crash: this is readily enough apparent when the USD completely decoupled from gold. That we can sit here and debate all of this says a lot about the time that was bought: anyone who understands this and hasn't taken advantage of it is a fool.

The "worse" will hit all those holding USTs. Those that are broke (most people) can't lose what they don't have. On the other hand, those that have (think they do) DO have something to lose. UST holders THINK they have an asset- wipe out that asset and all of a sudden one doesn't look so well off...

Potus: "All this QE mumbo jumbo failure is all Bush's fault. You see, when I became America's first, half white President, my Job #1 was to beat out the previous # of Golf Rounds record set by any prior one, with that information written down, on the record, because my Administration doesn't hide anything, we are the most transparent in the history of our Country You see, and all this info was submitted, thru the NSA or the Cia, I forget which to be exact, to Oslo, as my Nobel Peace Prize submission."

We've been warned for a lot longer than that, Yen. Yet it still continues. Even if there was another 30% market pull-back and another recession, who really cares? They will print it back up in the nominal, even if the real continues to decline.

The honest truth is, empires don't die quickly or in a big crescendo any more. They just kind of ebb away in self-indulgence, corruption and inefficiency. All easy efforts (like printing money out of thin air) are directed toward stopping the crumble but it can't be stopped, only managed, since the rot is constantly reinforced by the endless short term patches.

Not many major nations are being overrun by their enemies in the literal sense any more. It's done economically now. And that's what's happening to us.

This is correct, the USD and other fiats will hold their value due to the masses demand for $€£¥ they need to meet their weekly debt obligations, the PTB have chained the masses to the debt hamster wheel, thus underpinning the value of the fiat that they can print at will.

They can modulate the supply of QE as they see fit in order to create any level of money supply-GDP- economic activity, they choose.

Until the sheeple refuse fiat, (which they won't or they will lose their McMansion ) the game will continue, and the sheeple will continue to pay the cost of their own slavery.

This will continue even as the systems and empires crumble due to rising real input costs, and the sapping of entrepreneurial flair.

Sudden resets happen throughout history after total war, but economic resets seem to be slower and more grinding.

For a while I couldn't read enough on the three main Spanish treasure fleets that sank off Florida. One off Key West, one on the upper Keys and one from West Palm to Port St Lucie. Once a year all the Spanish Empire gold, from the Philippines, Chile, Columbia would be assembled in Havana and in a grand fleet sent to Spain. In Spain, the gold was long spent. It was scheduald for debt payments, and late in the regime, just to service interest only. When the hurricains sunk the flow, the Royal " economy " crashed, ( As an aside, lots were owed to Spanish Jews, and when the Royals couldn't pay, and wouldn't tax anymore, the Jews were given the bums rush off to N. Africa.

Obamacare is a new tax flow stream. Like a new Soanish gold field. FedGov knows good and well that Treasury note holders like Mafi loan sharks have asked them how they are going to service the vig? Obamacare is the new income stream, opertunity to bust out, strip, drain a new( ish ) sector of the economy. Yeah, you kids pay now and later on, years on, decades, their will be care for you. Honest. Trust us. So, like a degenerate kid gambler, pressured by loan sharks, he tells them he just got the old mab to give him a dealership to run. Run into the ground.

"Not many major nations are being overrun by their enemies in the literal sense any more. It's done economically now. And that's what's happening to us."

I don't so much believe that it's happening to us from outside forces so much as from internal ones. I think that most of us here know that currencies always end up blowing out. What most get WRONG, however, is the WHY: currencies represent growth, and when the physical realities can no longer support growth (say one's military forces are not powerful to grab growth from another country) then the currencies themselves are "grown" (through debasement) to make it look like growth is occurring (for the US, this phase was entered back in 1971).

The empire might not die quickly, but those within it are likely to die sooner (than if the empire was not dying). Power hangs on to the bitter end: actual speed is more determined by the citizens within the empire, whether they slowly shift away from it or they decide to chop its head off.

"...currencies represent growth, and when the physical realities can no longer support growth..."

I'd say not only that, but that they begin to live beyond their means, as the US was doing in 1971 with Vietnam and the newly instituted social programs. Of course, what you say makes sense, ultimately, but people's wants get confused with needs, and the former become the latter, thus making endless growth an unattainable rainbow.

QE is now normal, it will end itself with Zimbabwe type stock market highs. Everyone will be happy. Next step will be re-introduction of $500 and $1000 bills and so we will go on until working as school teacher, government employee, production line, assembly line, engineer will be not enough to pay rent or mortage and food. Speculation and gangsterism [Wall Street raw model] will be the only mean to make money. Economy will stall and only than US will default.

That is when the military will be marching members of the FED out by gunpoint. The government will not pay back the debt owed to the FED when this goes south. They will dissolve them and make some examples out of a few bankers to put the other creditors on notice.

The Fed is intended to be the fall guy. It is, after all, just an institution, one that is not actually OF the govt.. None of the actors within its institution have been or will be hanged by the System: that's the agreement. Their power is going to die no matter what, so this is the pill that is to be swallowed: they'll avert death-by-light-pole.

So, yes, the "make some examples out of a few bankers" will be just for show.

I spent years saving and waiting to buy property. I'd sold my previous house at the top of the national market. Bought my home (home is different than house!) about three years ago when both prices and rates were low. That was my goal, I did it: well, it was the goal with which my lifestyle change hinged upon.

That said, WTF would one want to stay on an overcrowded island?

As to "Go south, far far south," if you're white you might want to take into consideration the possibility that you won't be seen in the same light as you likely were in the past.

Keep an open mind, be receptive & respective to other cultures & try your best - maybe it works, maybe it doesn't. That being said I'm not white. I can blend anywhere south of the equator that's not right in Africa. Not black / African by any heritage so there's no chance of blending on that one for me.

indeed. Now if there were equations, time series, confidence intervals, that kind of thing, at least one could say it's math. The so-called "technical" analysis is far from technical & far from analysis.

How about it being the result in multinational financiers raping our economy through a corrupt financial and a compromised monetary system, hand in hand with their legislative lackeys? And this "law of association" you refer to, which says not to worry about outsourcing and loss of living wage jobs in the US (because of our less "efficient" labor market) was twisted by Mises misers to create a justification for neoliberal colonialists to exploit the resources of other sovereigns. Any country that doesn't impose protectionist measures to keep the globalists from creating a world of debt slaves is in danger of a neofeudalist future. These neoliberals have allegiance to no country, and there is no reason to expect they will see any value in stopping the sucking up of weath by the global oligarchs as the citizenry are brainwashed into thinking that the "free" markets these oligarchs control are more important than social rights as sovereign citizens.

"To be sure, not all of this structural change in the economy's capital structure can be blamed on the credit bubble. Partly it is probably also a result of the vast increase in global trade, which enabled a different and more efficient distribution of production to be put into place (labor-intensive consumer goods such as apparel are for instance nowadays mainly produced in China and other Asian nations). To the extent that the shift is due to the law of association it is beneficial and nothing to worry about."

Actually there's an entirely different phenomenon at work: so long as the people can migrate as freely as the jobs there is no problem. It's the statist anti-protectionist intervention to protect movement of jobs but NOT movement of people that causes the problem. It's like trying to hit the gas for a car while simultaneously using another mechanism to lock gears or brakes to hold them back. It's unstable & something bad will happen very soon after.

Right. The globalists are free to move from country to country. If you have the resources, you don't need a country. The rest of us are stuck trying to make the best of the sovereign we got stuck with. So, your perfect world would have all workers be globetrotters, moving to where the jobs are? This makes no sense.

All should keep their eye on the ball, the "ball" being "resources." Can't do much of anything without them. And we, as a species, are rapidly burning through the readily available stashes.

The whole notion of "jobs" depends on widely available, cheap energy in which to move us to/from those jobs. The "jobs" paradigm is one of a global machine. That global machine is failing.

Although it fails to properly identify the post WWII growth spurt as being due to robbing the future, this Stratfor document has some interesting comments about the impacts of protectionism on trade and labor:

While I believe that it's a good assessment, it is so only for a failing system. And though this system is failing I highly doubt that trying to alter it, as MDB suggests, is going to produce anything other than what it is destined to become: an eventual failure.

IMO we've only but distorted reality for a brief time and that eventually, as available, cheap energy stockpiles dwindle, we'll all resort to smaller worlds (pulling back to more local-based social/trade paradigms). And in this future, which certainly has a higher probability than that of our current model continuing, the overwhelming majority of "jobs" that exist today won't continue to exist (in the future).

I suggested the source of the problem, not the solution. There is no solution for a doomed system. For individuals who can migrate we can find a way to survive. For those that don't, all hell will break loose.

IF we had, previously, decades ago never permitted special treatment for companies & jobs to migrate while stopping each PERSON was blocked, our problems today would be very different. No one would be screaming about how globalization destroyed employment. None.

Instead we'd still be screaming about resource consumption being over the top & how we facilitated it by letting people & companies go anywhere they pleased, like locusts depleting resources. But we were going to get there anyways as you well know so we would be at least facing a real problem instead of one constructed purely by states.

I don't agree. The free movement of worker units just plays into the neoliberal plans. With no sovereign, all that is left is the heartless multinationals who will eventually replace you with a robot. And there you are in a foreign culture, possibly speaking a foreign language, but with no sense of community or shared social goals with your fellow worker units. The ideology of libertarians does not make intuitive sense and upon further inspection appears to be a perfect framework for neoliberal oligarchical domination.

You don't agree with history? This is how we all used to be, like it or not. It's not subject to opinion.

Multinationals are THE PRODUCT OF SOVEREIGNS. Without their taxation & monpoly on force the rest of us would never let multinational corporations even exist. WE the people would exist, migrating everywhere, making small businesses everywhere, finding minimal cost for transport & production, transporting goods to ship or people to locate nearer to production & energy sources.

We'd have more robots because we'd be CUSTOM MAKING them to help us do our jobs, not reduce jobs.

As it is jobs are replaced by other humans at lower prices using fiat trickery, NOT replaced by robots.

Foreign culture + language do NOT remove sense of community. I live in Canada where I can see many, many languages co-existing and it merely spreads culture and there's great overlap. Portuguese, Spanish, French, Indian, Chinese, whatever, you name it we got it. It's a stronger sense of community but perhaps you don't get that in America where race-slavery and race-genocide are hard-coded into your country's DNA.

There are plenty of children whose parents come from differing cultures (as mine do) and frequently they learn multiple languages & cultures as a result.

Please, point me to this mythical time of perfect worker unit mobility of which you claim history provides an example. It never has and never will exist except in propgandists play books. Your wonderful melting pot Canada, for example, has language requirements for immigrants. And I've heard rumblings about the slave wage tech workers taking away living wage jobs up north, another neoliberal plot to marginalize citizens in favor of worldwide labor units caught up in a Darwinian struggle.

I said the state didn't INTERVENE to stop it. The city gates may be locked, you may be turned away, but no one would stop you from GOING.

And no, Canada has not got jobs lost to slave-wage tech workers, we have work here to do & we don't immigrate in so many we can't hire locally. As for language requirements I reject them because it should be up to each business & each community to accept people without intervention by the state. Quebec's hard enough on its own: it's not the government that has to give you a hard time if you refuse to learn French.

It's how we all used to be. There was no ultra-special privilege for travellers. There was no special system of controls & rules at these "national borders" to bio-metrically scan every person & reject those who are on the "hit list" of the elite, while the elites are never subjected to barriers in the first place.

Once upon a time these barriers of energy (cost of fuel & food) to move were more equal, no matter your riches & social standing, though the poor obviously had less regardless. Once upon a time it was city-states, not nation-states, with migration being very common for work rather than being stuck to just one city forever or one "nation".

This imperfect world has artificial barriers. Once we remove them we remove the problems they cause. The outcome won't be perfection but it will be an improvement.

Even if there were perfect mobility, the increasingly automated world isn't producing enough jobs to keep everybody employed and the trend is getting worse.

Additionally, I believe that communities of people with a common bond of political disenfranchisement stand a better chance of defeating the globalists who would choose to have interchangeable worker units.

Commercial loans are being rewritten to avoid default. No reason needed, no credit needed, no collateral needed...just don't leave the space! Please! Don't care if you can't make the rent...if YOU go then they all go.

See empty Malls....or Malls full of low quality junk sold to teenagers...

I literally just got back from the post office, picking up my business' mail.

Just one letter. Wells Fargo. I do not bank with them.

It was an offer of a $100K line of credit, rate TBD but between 1.75% and 9.75% + prime.

Key line: "You won't need to provide collateral and once approved, any amount you repay within the assigned credit limit becomes available to use again."

I'll quote the teller from the bank I do bank with, from a few days ago: "we need to set this shit [the banking system] on fire and walk away." That's from a 30-something single mom bank teller making like 24K a year.

But, BUT... I'm hearing ads on the radio about buying houses to flip! All is back to normal again. </sarc>

When I'd heard these ads I was confused as to whether I should look to jump off a tall building or to go shoot those who were responsible for making them. Fortunately, for myself as well as for "them," I screamed so loudly in my head that I got a headache and wasn't able to do much of anything while in such an emotional state!

I cant quite understand the need to build these large 80,000 sqft warehouses outside Toronto that still havent been occupied 100% and they still continue to build them today. And then it came to me, keep the basic trend in pattern.

You know what happens to people held for weeks in open stadiums during a Canadian winter? They die befor you can "interview", bio scan them and release then back in to the community. You lose a lot of potential informants. Plus they get dirty, smell bad and reduce the Canadian FEMA worker s work experience.

She doesn't do anything to us. It's a figurehead name now only. The people wouldn't put up with anything from the UK's queen that is the monarchy figurehead if it was an attack on us, caging us up, any more than the UK would nor Australia. The British Empire is done. The monarchy is powerless to actually police & control every nation still in it.

FEMA is as bad as it gets next to Hitler's ovens or the imprisonment of Palestine by Israel, once it hits full steam. No, you are the one that's screwed.

But there was still growth, and that growth would eventually collapse. You see, even though the USD was backed by gold that backing was only a fraction (the death march had already been happening). Also, and IT is the reason why the USD completely detached from gold, US oil production peaked in 1971; oil/resources = growth; with insufficient physical resources available to create real growth the ONLY thing left was to simulate it via finacial wizardry.

I'd be interested in hearing from you (or anyone else) on your take on this Stratfor doc:

I see a lot of the permissiveness occurring as a result of "fighting Communism." We might have won the battle, but it's sure looking like we lost the war... (not that Communism is going to "win" so much as the West, with its Bretton Wood structure, is going to "lose").

I don't think that TPTB will ever publish this on the front page. The "frown" will be turned upside down, it'll materialize in some other form not recognizable to what is really going on: they'd never admit failure by/of themselves.

I recall the story of the business department at Harvard(?) publishing that all was on the rebound at the start of the Great Depression. Their publications ceased not too long after that as things turned to shit.

The Internet has destroyed traditional journalism and truly crimped the capability of making money in the field. More poetic justice for the so-called guardians who did not see this (or anything else) coming.

"This also means that monetary pumping will likely continue at full blast, as central bankers continue to erroneously assume that the policy is 'helping' the economy to recover."

A small point but I disagree with your assertion that central bankers believe they're helping anything other than themselves and their small group of cronies, they know full well that they're fucking over every man woman in child in whatever country they happen to print money in.

The BIG DECEPTION* is that we can have perpetual growth on a finite planet. If you buy in to this then you sign up for wars (perhaps doing so based on some declaration of it being commanded by/from "God"). All these clowns are merely part of the circus: if you don't like them then get away from the circus.

* Nature is deceptive, humans are OF nature. Nothing sinister at all. Most cannot beat these folks in their niche so they make up all sorts of excuses for continuing to try and do so rather than finding a different niche that provides for their requirements.

Their asses are in the sling that is THE SYSTEM. If they don't keep THE SYSTEM going then it's GAME OVER. I do NOT believe that it is their intent to willingly draw negative attention to themselves or to disrupt the very SYSTEM that keeps them in power.

It is the system's failing to be able to perpetute growth (this is a finite planet, in which case NO system can succeed in this regard) that is "fucking over every man woman"... NOTE: if you think things are bad you ought to see what life is really like for the overwhelming majority of humans on the planet (in India alone there are some 750 million people living on $0.50/day!). Hang all the bankers and you're STILL looking at resource shortages- take it up with Mother Nature (but it's kind of hard to hang Mother Nature).

Before the author plots his time series ratio of capital to consumption goods, and presents the argument that it is linked to monetary policy without direct evidence, he should also plot his ratio - particularly the second one, against the inflation adjusted oil price.

a funny thing can happen within the dynamics of group psychology. if people see others doing something in public that at first seems crazy or immoral and also notice no repurcussions for these acts, if they in fact see the act rewarded they are quite apt to eventually accept it themselves.

this was clearly exemplified 26 years ago in Danvers, MA in the infamous Big Dan's rape case and even much more recently by numerous gang rape incidences in India. typically, one or two alpha types get the idea, committ the deed to goad the rest of the pack and although these betas would never have even considered something like this before, they do now. there are numerous instances of payoffs, kickbacks and other immoral behavior that seep their way into our society until it is seen as business as usual.

it is in this way that the nefarious RICO type operations committed by central banks around the world manage to steal the wealth of the country and its people:

everyone's doing it, so I guess that's just the way it is. in fact, people tell me this is just the new normal, so carry on.

In India it has more to do with it being a larger societal view than of corruption (of a few).

People go crazy when things just don't line up. Our story line is so massively crooked that there is no way we can line things up. When we're all under the illusion that we can have it all, we can do whatever it takes to have perpetual growth on a finite planet, when this illusion collides with reality... we start to see that it's all not been what we've thought- insanity is thus an easy byproduct.

As I've often stated: it's silly to complain about the clowns when you're at the circus.

no exit. that reeks a bell....
NICK LOWE - CRUEL TO BE KIND - HQ Best Version. New Audio.http://www.youtube.com/watch?v=b0l3QWUXVho
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and this too was, he then, was said ...
sloppy moe injun joe is ticklishhttp://www.youtube.com/watch?v=MnXZB9SkS44
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ok.
will the distortion be sustainable?
not really ...
but the wind does blow and new bubble
scents define virtual real valuation
timing factors.
ok, there ya' go.
.http://www.goodreads.com/work/quotes/8826974-huis-clos
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“So this is hell. I'd never have believed it. You remember all we were told about the torture-chambers, the fire and brimstone, the "burning marl." Old wives' tales! There's no need for red-hot pokers. Hell is—other people!”
? Jean-Paul Sartre, No Exit

If they'd have been different would you not have your LGD? (BTW - to me, a farmer, LGD stands for Livestock Guardian Dog)

Were YOU faked out by all they're doing? Or, did you act on your own instincts (and took full responsibility for your actions and resulting situation)?

Lastly, if they were all dead how would this change the equation that we'd still be massively in debt and running a system of perpetual growth on a finite planet in which resources were being rapidly depleted?

People! They're clowns at the circus! You're going to look pretty silly clubbing clowns at the circus: left with dead clowns, blood all over the place, popcorn likely spilt AND the circus continues (until the Big Top collapses due to Mother Nature's forces).

So, have central bankers drunk the Kool-Aid with the acid in it? What we see here is global acceptance of the Bernankean theory – largely derived from Milton Friedman's analysis of the depression era and Bernanke's own analysis of Japan's post bubble era – that even though new bubbles may be staring everyone into the face, central banks must 'not make the mistake to stop easing too early'. It is held that that would 'endanger the recovery', similar to what happened in the US in 1937 and Japan in 1996.

*************************

That statement is false. Friedman's analysis was that the central bank was complicit in extending the depression.

"Once the economy's capital structure is distorted beyond a certain threshold, it won't matter anymore how much more monetary pumping the central bank engages in – instead of creating a temporary illusion of prosperity, the negative effects of the policy will begin to predominate almost immediately."

We're already past that stall point. The easing has had no effect in that several intsallments. We may be two or more years into that situation, in fact.

"Given that we have evidence that the distortion is already at quite a 'ripe' stage, it should be expected that the economy will perform far worse in the near to medium term than was hitherto widely believed. This also means that monetary pumping will likely continue at full blast, as central bankers continue to erroneously assume that the policy is 'helping' the economy to recover."

I don't think they assume any such thing. "If you don't fork over 700 billion dollars right now, the tanks will be in the streets." It was a con job.

Digging a deeper hole has never helped an economy recover. The IMF is now talking about government CONFISCATING peoples wealth, due to the deeper hole being dug. How is confiscating people's wealth going to help the economy recover?

"So, have central bankers drunk the Kool-Aid with the acid in it? What we see here is global acceptance of the Bernankean theory – largely derived from Milton Friedman's analysis of the depression era and Bernanke's own analysis of Japan's post bubble era – that even though new bubbles may be staring everyone into the face, central banks must 'not make the mistake to stop easing too early'."

There is no such thing as ending the easing too early. That's like saying the FED raised rates too early when it raised in 1999, and 2005. It is like saying the nasdaq bubble wasn't big enough at 5,000, or home prices at $600,000 in Los Angeles weren't high enough.

If there is no exit, then stimulus must be permanent, thus too soon to stop easing is for ever. The example used of 1937, might as well be 1938, 1942, 1946, 1949, 1954, etc. was too soon to stop easing.